An Assessment of the Restaurant Grease Collection and Rendering Industry in South Carolina

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An Assessment of the Restaurant Grease Collection and Rendering Industry in South Carolina Final Report An Assessment of the Restaurant Grease Collection and Rendering Industry in South Carolina Prepared for the South Carolina Energy Office 1200 Senate Street 408 Wade Hampton Building Columbia, SC 29201 and the US Department of Energy/Southern States Energy Board Southeast Biomass State and Regional Partnership An Assessment of the Restaurant Grease Collection and Rendering Industry in South Carolina Prepared by: Travis Moore & Erika H. Myers Revised by: Tara Copeland & Erika H. Myers South Carolina Energy Office 1200 Senate Street, 408 Wade Hampton Building Columbia, SC 29201 (803) 737-8030 Prepared for: Southeastern Regional Biomass Energy Program Administered for the United States Department of Energy by the Southern States Energy Board 6325 Amherst Court Norcross, GA 30092 Under Contract No. SERBEP-SSEB2003MO-MSA-001 December 1, 2006 Revised: September 1, 2010 2 | Page DISCLAIMER NOTICE This report was prepared as an account of work sponsored by an agency of the United States Government. The Southern States Energy Board, nor the United States Government, nor the South Carolina Energy Office, nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability of responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favoring by the Southern States Energy Board, or the United States Government, the South Carolina Energy Office, or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the Southern States Energy Board, or the United States Government, or the South Carolina Energy Office, or any agency thereof. 3 | Page An Assessment of the Restaurant Grease Collection and Rendering Industry in South Carolina Table of Contents Executive Summary ........................................................................................ 5 Introduction ..................................................................................................... 6 Background and Terminology of Fats, Oils, and Grease (FOGs) .................. 7 Methodology ................................................................................................. 10 Results ........................................................................................................... 11 The Haulers and Renderers ........................................................................... 12 Regulating the Industry ................................................................................. 14 Emergence of Biodiesel ................................................................................ 17 Conclusion .................................................................................................... 19 Recommendations ......................................................................................... 20 Appendix A (DHEC Retail Food Establishments Regulation) .................... 22 Appendix B (The South Carolina Rendering Act of 1998) .......................... 23 Appendix C (Georgia’s 2004 Law Regulating Grease Haulers) .................. 27 Appendix D (Waste Grease Collectors for South Carolina) ........................ 29 4 | Page EXECUTIVE SUMMARY As oil prices fluctuate, America is beginning to evaluate its options for inexpensive, domestically-produced fuels. One of those options is biodiesel, which has become a particularly attractive option for producers in South Carolina. One of the key issues facing the biodiesel industry is the identification of feedstocks to support production. Animal or recycled fats represent an attractive option because conventional feedstocks, like soy oil, are not as economically feasible at this time. The purpose of this report is to document the potential for using waste grease as a feedstock, to locate the grease, and to document how much grease is available in South Carolina. This report looked at two major forms of waste grease: yellow grease and brown grease. Yellow grease is defined as spent cooking oil and other fats and oils collected from commercial or industrial cooking operations. Brown grease is defined as oil collected from grease traps that are installed in commercial, industrial or municipal sewage facilities to separate grease and oil from waste water. In order to gain a better understanding of the current state of waste grease collection, the South Carolina Energy Office (SCEO) conducted two surveys of the waste grease collectors operating within the state. A survey of six commercial yellow grease collectors in 2007 accounted for 8,957 restaurants and 1,148 institutions that produced 7,908,564 gallons a year. As a result of incomplete collection data from the survey, additional data was gathered from the South Carolina Department of Health and Environmental Control (DHEC). It was estimated 27,183,728 gallons of waste grease could potentially be produced a year. It was also estimated that 70 to 95 percent of the available yellow grease is collected in metropolitan areas. A second survey was performed in 2010 with brown grease collectors and wastewater treatment plants. According to the survey results, 218,100 gallons of brown grease are collected annually in the state. However, due to the low survey response, the SCEO anticipates more brown grease is collected. Previous attempts to establish the economic impact of yellow grease and other grease products have met with significant difficulty. The reason cited for this difficulty was the inability of analysts to collect sufficient data on industry income, expenses, employment, and product output to conduct such a study. One possible reason for the lack of data is that the industry is so competitive that company representatives are reluctant to divulge information that might compromise their ability to compete. An examination of the South Carolina Code of Laws and the Department of Health and Environmental Control (DHEC) regulations reveals the extent of current regulation of the hauling and rendering industry. The low level of regulation indicated could have significant consequences with the emergence of biodiesel and the resulting demand for waste grease. 5 | Page INTRODUCTION Biodiesel is a clean burning alternative fuel, produced from domestic, renewable resources. Biodiesel contains no petroleum, but it can be blended at any level with petroleum diesel to create a biodiesel blend. It can be used in compression-ignition (diesel) engines with little or no modifications. Biodiesel is simple to use, biodegradable, nontoxic, and essentially free of sulfur and aromatics. In comparison to petroleum diesel, biodiesel is better for the environment because it is made from renewable resources and produces lower emissions. It is less toxic than table salt and biodegrades as fast as sugar. Since it is made in the United States from renewable resources, its use decreases our dependence on foreign oil and contributes to our own economy. One of the key issues facing the biodiesel industry is the identification of inexpensive feedstocks to support production. While making biodiesel from a wide variety of fat and oil products is possible, utilizing virgin soybean oil has been the feedstock of choice in the United States and many biodiesel plants were designed to use this single feedstock. In 2008, soybean oil prices increased dramatically,1 and fossil fuel prices fell. Oil was as low as $40/barrel at the end of 2008. Additionally, public approval of the use of soybean oil for biodiesel production waned, after growing concerns of a food crisis.2 In January 2010, the biodiesel industry was hit hard by the expiration of three federal tax credits, including the Biodiesel Income Tax Credit, the Biodiesel Mixture Excise Tax Credit, and the Small Agri-Biodiesel Producer Tax Credit.3 South Carolina still retains the Biofuels Production Tax Credit and the Biofuels Production Facility Tax Credit,4 but those credits are only useful if the producer has state tax liability. Animal or recycled fats cost considerably less than virgin soybean oil and therefore represent an attractive option to increase the supply of biodiesel. As a result, some producers are now using restaurant waste grease to fulfill their feedstock needs. As of March 2010, two facilities claiming the South Carolina Biofuels Production Tax Credit for 2009 used waste grease for biodiesel production, Midlands Biofuels, LLC and 5 Panacea Biofuels, LLC. Based on data collected, it is estimated that the food service and hospitality industry produce between eight million and twenty-seven million gallons of yellow grease per year in South Carolina and 218,100 gallons of brown grease. This grease 1 Keith Bradsher, The Other Oil Shock: Vegetable Oil Prices Soar, NY TIMES (Jan. 19, 2008), available at http://www.nytimes.com/2008/01/19/business/worldbusiness/19iht-palmoil.1.9339824.html. 2 Lian Pin Koh, Biofuels, Biodiversity, and People: Understanding the Conflicts and Finding Opportunities,141 BIOLOGICAL CONSERVATION 2450 (2008), available at http://www.mariana.ativahost.com/biocon/documents/Koh2008.pdf. 3 Alternative Fuels and Advanced Vehicles Data Center, Federal and State Incentives and Laws (August 11, 2010), available at http://www.afdc.energy.gov/afdc/laws/laws_expired.
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